Exercise 9 - Derecognion On March 31, 2020. Sterne Cerp. retired a machine used in manufacturing designer parts. The machine was acquired May 1, 2017. Straightiline depreciation method was used computed up to the last month before retirement. The asset had an estimated residual value of P2 0,000 and a ve- year life. On December 31, 2019, the balance in the accumulated depreciation is P32 0,000. The machine was scrapped and the Company did not receive a single consideration. Required: 1. The loss on retirement is: [round off to the nearest peso, if needed] 2. Prepare the journal entry to record the retirement. Exercise 10 - Dereoognition Helena acquire an asset that had a cost of P130,000. The asset is being depreciated over a 5-year period using the sum-of-the-years' digit method. It has a salvage value estimated at P10,0DD. Required: The loss/ gain if the asset is sold for P381100 at the end of the third year is: Exercise 6 - Borrowing Cost I Iojo Company loaned P 2,500,000 from the bank for a construction of a building during the year 202 0. The construction started on January 1 and was completed on December 31. The specic loan amount did not sufce the expenditures for the building so Jojo used funds from other existing loans. The currently existing general purpose loans were: Notes payable, 1 0%, [for general purposes] P3,0 00,000 Notes payable, 10%, general borrowings 2,000,000 Notes payable, 12%, general borrowings 3,000,000 Expenditures for the COHStI'uCtiOn in 2020 were: January 1 P2,500,000 March 1 1,200,000 September 1 1,500,000 November 1 800,000 Round-off all computed % to nearest one percent and round off all peso gures to the nearest one peso. Required: Compute the capitalizable borrowing cost. Exercise 7 - Government grant I On Ianuary 1, 2018, Citlmart Inc. was granted 5,000 acres of land in a village, located near the slums outside the city limits, by a local government authority. The condition attached to this grant was that the company should clean up this land and lay roads by employing labourers from the village in which the land is located. The government has xed the minimum wage payable to the workers. The entire operation will take three years and is initially estimated to cost P160 million. The fair value of this land on the date of grant was P240 million and is expected to increase by at least 20% annually because of the improvements to be done by the company. In relation to the attached condition, the company incurred costs of P30 million in 2018 and P70 million in 2019. On December 31, 2019, the company estimated that it will incur additional cost of P30 million in 202 0. Required: 1. How much should be recognized as income from government grant for the year ended December 31, 2019? 2. Prepare the journal entries in 2020 related to the government grant. Exercise 8 - Government grant I Lee Company received an P1,800,000 subsidy from the government to purchase manufacturing equipment on January 2, 2020. The equipment has a cost of P3,000,000, a useful life a six years, and no salvage value. Lee depreciates the equipment on a straight-line basis. Required: Under each of the following independent cases: 1. What is the book value ofthe asset on December 31, 2020? 2. What is the depreciation expense for the asset in 2020? 3. Prepare journal entries in 2020 Case 1 If Lise chooses to account for the grant as deferred revenue. Case 2 If Lee chooses to account for the grant as an adjustment to the asset. Exercise 3 - Machinery I loestar Company purchase a new machine for an invoice price of P3,360,000 inclusive of vat of P360000. The purchase also had a purchase discount of P200,000 that Joestar was not able to avail due to financing difficulties. Other expenditures related to the machine were as follows: Shipping cost 170,000 Fees of experts for installation. 225,000 Refurbishing cost during installation 90,000 Trial run costs and testing cost before commencement of use. 85.000 Consultation fees before purchase 50,000 Safety rails and platform surrounding the machine 25,000 Cooling device installed, necessary to keep the machine running 445,000 Refurbishing costs after installation 115,000 Required: Compute the total cost of the new machine. Exercise 4 - Borrowing Cost l Double Deutch Company constructed a building in 2020. Commencement of construction was on January 1 and was completed on December 31. Double Deutch loaned from the bank specically to \" finance the said construction. The bank loan bears 12% interest per annum. The following pertains to the construction: Notes payable, 12%, specically borrowed for building construction 135,000,000 interest income from temporary investment 70,000 Loan amount spent on construction. 4,700,000 Required: How much should Monte Company capitalize as borrowing cost? Exercise 5 - Borrowing Cost High Standard Company erected a building during the year 2020. All funds used in construction were loaned for a generic purpose. The construction started on Ianuary 1 and was completed on December 31. The following pertains to the construction: \\ General purpose loan, 10% P3.000.000 General purpose loan, 12% 2,000,000 Average expenditures 3,125.0 00 Required: Compute the borrowing cost capitalized. Round off all computed % to nearest one percent. Exercise 1 - Land and Building Cost Paesh Company was organized in June 2020. The following transactions pertain to land and building: Jun. 1 Organization fees paid to the state P 150,000 30 Land and old building with fair value P1,000,000 3,000,000 30 Corporate organization costs 300,000 July. 1 Title clearance fees 50,000 Aug. 31 Cost of razing old building to make room for new building 100.000 Sept. 1 Executive salaries with no participation in construction 600,000 Dec. 31 Land real state tax for {Sn-months ended December 31, 2020 90,000 31 Cost of new building completed and occupied on this date 8,000,000 Required: 1. What is the cost of the land? 2. What is the cost of the new building? Exercise 2 - Land and Building Cost The following expenditures were incurred by Lyon Enterprises Co. in 2019: Purchase of land P 3,900,000 Land Survey 52,000 Fees for search of title for land 6,000 Building permit 35,000 Temporary quarters for construction crews 107,500 Payment to tenants of old building for vacating the premises 46,000 Razing old building 470,000 Excavating basement 100,000 Special assessment tax for street project 20,000 Dividends 50,000 Damages awarded for injuries sustained in construction 84,000 Cost of construction 29,000,000 Cost of paving parking lot adjoining building 400,000 Cost of shrubs, trees, and other Landscaping 330,000 Required: 1. Among the expenditures mentioned, determine the cost of land. 2. Among the expenditures mentioned, determine the cost of the building